GBP/USD Forecast: Pressure mounts ahead of BOE
|GBP/USD Current price: 1.2342
- The Bank of England is expected to leave the monetary policy unchanged, focus on forecasts.
- UK’s Markit Construction PMI plummeted to 8.2 in April.
- GBP/USD at risk of extending its decline in the short-term.
The GBP/USD pair fell to 1.2334, its lowest in two weeks, amid resurgent demand for the greenback, and worse than expected UK data. Markit published the April Construction PMI for the kingdom, which plunged to 8.2 from 39.3 previously, missing the market’s forecast of 22. The UK was set to review its lockdown measures this Thursday, but PM Johnson said that it would make an announcement on Sunday. Speaking in front of the Parliament, Johnson said that the UK could start easing restrictions as soon as next Monday, although he also made it clear that they would move on stages to prevent a second spike in cases.
Thursday will bring the Bank of England’s latest decision on monetary policy. Rates and the APP are expected to be left on hold, and the focus will be on growth and inflation forecasts for the quarters ahead, as large downward reviews are expected on the back of the ongoing pandemic. Also, investors will be looking for hints on how the BOE will deal with the economic contraction.
GBP/USD short-term technical outlook
The GBP/USD pair is hovering around 1.2340 as the day comes to an end, below the 23.6% retracement of the latest daily advance measured between 1.1409 and 1.2647. The 4-hour chart shows that the pair bottomed around a mild-bullish 200 SMA while holding below the 20 and 100 SMA, both converging in the 1.2430 price zone. Technical indicators have stabilised within negative levels, the RSI nearing oversold readings. Nevertheless, the risk remains skewed to the downside, although the next directional move will likely come post-BOE.
Support levels: 1.2330 1.2290 1.2250
Resistance levels: 1.2430 1.2485 1.2520
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